PayStream Advisors, a financial research and advisory firm, conducted a study to better understand the order to cash cycle. In it, they discovered what are some of the most common challenges facing collection departments and effecting the order to cash cycle. When 80 percent of revenue is coming from only 20 percent of customers, you know you are having an issue with managing your order to cash cycle. Imagine how much additional revenue you could gain by opening up the other 80 percent of cash flow from your existing customers, not even new sales!

So what were some of the greatest challenges discovered by PayStream? We break it down for you below:

NOT ENOUGH COLLECTION ACTIVITY

Due to the time constraints put on collectors because of the mass amounts of tasks they need to complete in just the short time of a day, the processes tend to be reactive as opposed to being proactive. Not enough collection activity doesn’t mean to say collection representatives are not busy, but rather that the tasks being completed aren’t adding as much value as they could. Since there is so much work to get done, between pulling reports on how far past due customers are and trying to process the invoices there’s barely enough time to call customers – the most important task.

HIGH TRANSACTION VOLUMES

When a company is quickly growing and expanding into new markets by making acquisitions or through organic sales growth, it’s usually a great thing! However, for the collections department it usually means chaos. When invoice volume grows, departments are usually trying to find ways to do more with less.

ERRATIC COLLECTION EFFORTS

Without the proper processes in place, each collector tends to be doing their own thing. They set personal goals, rather than trying to reach corporate goals. Some collectors might have their script down and works well for them, while others might struggle. With such varying methods, collection results end up erratic as well.

INCONSISTENT CREDIT ASSESSMENTS

Sometimes, when a department has no set roles assigned or no documented processes, credit extended to customers can seem haphazard. Some signs of this are that many customers are on a credit hold or that credit limits tend to be overly strict. When customers are denied the ability to purchase more because of a lack of transparency in the credit department, your business loses out on the possibility of additional cash flow.

MISSING INFORMATION & INADEQUATE REPORTING

Often times, collectors are working between many different systems. Their customer aging is in an Excel sheet, they’re tracking follow-ups on their Outlook calendar and the invoices are inside their ERP system. When you’re constantly moving back and forth, it’s likely you’ll end up with missing or incorrect information. It’s also difficult and time consuming to do any reporting when the information is across three different systems and not centralized in one location.

Many of these problems can be solved by automating accounts receivable. It keeps all information in one place and takes away the time needed to spent on manual tasks like scheduling follow ups or sending out emails, allowing collectors to focus on value added tasks. As the company grows and transaction volume increases, less stress is added to employees because the software allows them to keep up.

THE BENEFITS OF AUTOMATED ACCOUNTS RECEIVABLE SOFTWARE FROM REAL COMPANIES

QUICK LINKS

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